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Exam 10: Standard Costs and Variances

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Question 121

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Isaman Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. The direct labor standards for the company's only product specify 0.60 hours per unit at $21.50 per hour. During the year, the company started and completed 11,500 units. Direct labor employees worked 7,500 hours at an average cost of $19.50 per hour.Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and Property, Plant, and Equipment (net) . All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings.When the direct labor cost is recorded, which of the following entries will be made?

A) ($12,900) in the Labor Rate Variance column
B) $12,900 in the Labor Efficiency Variance column
C) $12,900 in the Labor Rate Variance column
D) ($12,900) in the Labor Efficiency Variance column

E) None of the above
F) All of the above

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Question 122

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Kartman Corporation makes a product with the following standard costs: In June the company's budgeted production was 3,400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month, the company purchased 25,400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8,931.The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The labor efficiency variance for June is:

A) $4,560 Favorable
B) $4,560 Unfavorable
C) $4,731 Unfavorable
D) $4,731 Favorable

E) B) and C)
F) B) and D)

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Question 123

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The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?

Signore Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. The standard cost card for the company's only product is as follows: During the year, the company purchased 34,600 gallons of raw material at a price of $9.10 per gallon and used 30,050 gallons of the raw material to produce 20,100 units of work in process.Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and Property, Plant, and Equipment (net) . All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings.When the purchase of raw materials is recorded, which of the following entries will be made?

Tharaldson Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The labor efficiency variance for June is:

Isenberg Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. The company does not have any variable manufacturing overhead costs. It recorded the following variances during the year: When the company closes its standard cost variances, the Cost of Goods Sold will increase (decrease) by:

Ravena Labs., Incorporated makes a single product which has the following standards:Direct materials: 2.5 ounces at $20 per ounceDirect labor: 1.4 hours at $12.50 per hourVariable manufacturing overhead: 1.4 hours at 3.50 per hourVariable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October:3,750 units of compound were produced during the month.There was no beginning direct materials inventory.Direct materials purchased: 12,000 ounces for $225,000.The ending direct materials inventory was 2,000 ounces.Direct labor-hours worked: 5,600 hours at a cost of $67,200.Variable manufacturing overhead costs incurred amounted to $18,200.Variable manufacturing overhead applied to products: $18,375.The materials price variance for October is:

Doogan Corporation makes a product with the following standard costs: The company produced 5,200 units in January using 39,310 grams of direct material and 2,380 direct labor-hours. During the month, the company purchased 44,400 grams of the direct material at $1.70 per gram. The actual direct labor rate was $19.30 per hour and the actual variable overhead rate was $6.80 per hour.The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The variable overhead rate variance for January is:

Lanciotti Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $276,000 and budgeted activity of 24,000 hours. During the year, the company completed the following transactions: a. Purchased 110,100 pounds of raw material at a price of $6.10 per pound.b. Used 103,120 pounds of the raw material to produce 39,700 units of work in process.c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 29,060 hours at an average cost of $21.80 per hour.d. Applied fixed overhead to the 39,700 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $265,800. Of this total, $198,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $67,000 related to depreciation of manufacturing equipment.e. Transferred 39,700 units from work in process to finished goods.f. Sold for cash 34,600 units to customers at a price of $50.90 per unit.g. Completed and transferred the standard cost associated with the 34,600 units sold from finished goods to cost of goods sold.h. Paid $150,000 of selling and administrative expenses.i. Closed all standard cost variances to cost of goods sold. Required:1. Record the above transactions in the worksheet that appears below. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net). 2. Determine the ending balance (e.g., 12/31 balance) in each account.3. Prepare an income statement for the year.

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:

Descamps Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for July: The variable overhead efficiency variance for the month is closest to:

The Bowden Corporation makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data: There were no beginning inventories of direct materials.The standard cost of direct material for one unit of output is:

Alvino Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead.The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $70,000 and budgeted activity of 14,000 hours.During the year, the company completed the following transactions:Purchased 32,200 kilos of raw material at a price of $7.80 per kilo. The materials price variance was $22,540 Favorable.Used 30,480 kilos of the raw material to produce 27,800 units of work in process. The materials quantity variance was $850 Favorable.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 18,260 hours at an average cost of $20.50 per hour. The direct labor rate variance was $9,130 Unfavorable. The labor efficiency variance was $24,000 Favorable.Applied fixed overhead to the 27,800 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor−hours allowed. Actual fixed overhead costs for the year were $59,500. Of this total, $22,500 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $82,000 related to depreciation of manufacturing equipment. The fixed manufacturing overhead budget variance was $10,500 Favorable. The fixed manufacturing overhead volume variance was $27,300 Favorable.Completed and transferred 27,800 units from work in process to finished goods.Sold (for cash) 29,000 units to customers at a price of $31.90 per unit.Transferred the standard cost associated with the 29,000 units sold from finished goods to cost of goods sold.Paid $101,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. The ending balance in the Raw Materials account will be closest to:

Lakatos Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials:a. Purchased 151,800 kilos of raw material at a price of $9.70 per kilo.b. Used 140,870 kilos of the raw material to produce 38,100 units of work in process.The company calculated the following direct materials variances for the year: Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When the raw materials used in production are recorded in transaction (b) above, which of the following entries will be made?

Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) . The company has provided the following data for the most recent month: What was the variable overhead rate variance for the month?

Arena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead.The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $81,000 and budgeted activity of 18,000 hours.During the year, the company completed the following transactions:Purchased 35,400 pounds of raw material at a price of $4.60 per pound.Used 32,180 pounds of the raw material to produce 26,900 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour.Applied fixed overhead to the 26,900 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment.Completed and transferred 26,900 units from work in process to finished goods.Sold (for cash) 27,100 units to customers at a price of $36.60 per unit.Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold.Paid $149,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.The company calculated the following variances for the year: To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. The ending balance in the Property, Plant, and Equipment (net) account will be closest to:

Gersbach Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. The company has provided the following information: The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year: The net operating income for the year is closest to:

An unfavorable materials quantity variance indicates that:

A total of 6,850 kilograms of a raw material was purchased at a total cost of $21,920. The materials price variance was $1,370 favorable. The standard price per kilogram for the raw material must be:

Galeazzi Corporation makes a product with the following standard costs: In October the company produced 3,000 units using 8,380 pounds of the direct material and 2,610 direct labor-hours. During the month, the company purchased 9,500 pounds of the direct material at a total cost of $55,100. The actual direct labor cost for the month was $48,546 and the actual variable overhead cost was $16,965. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required:a. Compute the materials quantity variance.b. Compute the materials price variance.c. Compute the labor efficiency variance.d. Compute the labor rate variance.e. Compute the variable overhead efficiency variance.f. Compute the variable overhead rate variance.